FG dom­i­nates NSE bond mar­ket, raises N2.98tn

...plans N510bn in Q1

The Punch - - CAPITAL MARKET - Sto­ries: Fey­isayo Popoola

The Chief Ex­ec­u­tive Of­fi­cer, Nige­rian Stock Ex­change, Mr Os­car Onyema, said cap­i­tal rais­ing at the NSE was dom­i­nated by the Fed­eral Govern­ment in 2019 as it raised N2.98tn.

Onyema, while speak­ing at the 2019 mar­ket re­cap/2020 outlook, said on Mon­day the Fed­eral Govern­ment ac­counted for over 60 per cent of bond is­suances on the NSE in a bid to fi­nance fis­cal and in­fra­struc­ture deficits.

he stated that the to­tal amount of bonds is­sued in 2019 were N3.10tn, of which 60 per cent (or N1.86tn) was raised by the Fed­eral Govern­ment through new listings of bonds.

The Fed­eral Govern­ment also is­sued N1.12tn sup­ple­men­tary bonds on the NSE, which rep­re­sented 36 per cent of the to­tal amount of bond is­suances.

Cor­po­rate bonds ac­counted for four per cent (or N124m) of the to­tal amount of bonds is­sued in 2019.

The Fed­eral Govern­ment is also billed to is­sue about N510bn worth of bonds in the first quar­ter of the year.

The Debt Man­age­ment Of­fice in a sched­ule said the bond is­suance would be be­tween N420bn and N510bn.

It said the bond of­fers would be made on Jan­uary 22, Fe­bru­ary 18 and March 25, where the APR 2023, APR 2029 and APR 2049 bonds would be re­opened.

Ac­cord­ing to the sched­ule, the Fed­eral Govern­ment would be of­fer­ing about N45bn to N55bn each month on the APR 2023 and APR 2029 bonds at 12.75 per cent and 14.55 per cent re­spec­tively.

On the APR 2049 bonds, it said about N50bn to N60bn would be of­fered in each month at an in­ter­est rate of 14.80 per cent.

An­a­lysts at United Cap­i­tal Plc said in their 2020 outlook re­ported that the fixed in­come mar­ket would be a cor­po­rate/ pri­vate is­suer mar­ket due to the buoy­ant level liq­uid­ity and the low-yield en­vi­ron­ment.

They said yields on the FGN trea­sury bills were pro­jected to stay in the mid-to-high sin­gledigit lev­els and bonds yields at low dou­ble-digit lev­els, es­pe­cially in the first half of the year.

Ac­cord­ing to them, in­ter­est in riskier as­sets, mostly cor­po­rate pa­pers, will in­crease while the rate on Open Mar­ket Op­er­a­tion bills (solely for For­eign Port­fo­lio In­vestors and banks) are un­likely to wit­ness sig­nif­i­cant changes.

This, they said, was due to the con­tin­ued ef­forts of the Cen­tral Bank of Nige­ria to de­ploy its set of un­con­ven­tional pol­icy tools to at­tract the FPIS and limit an im­pend­ing dol­lar out­flow in the first quar­ter of the year while pre­serv­ing the stock of re­serves above the $30bn thresh­old.

They said the sov­er­eign yield curve was ex­pected to re­main nor­mal in the first half of the year, which might re­verse to a hump-shaped curve from the third quar­ter.

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